VIENNA, Feb 7 (Reuters) - Siemens, steel maker Voestalpine and hydropower firm Verbund are planning to build a cutting-edge plant to make green hydrogen more suitable for industrial use, the companies said on Tuesday.

Utilities and industrial firms are under increasing pressure to reduce carbon dioxide (CO2) emissions and they hope to use excess power generated by renewable sources such as wind or solar to create hydrogen from water with electrolysis.

The hydrogen can then be stored for reconversion into power or for direct industrial use. The process might in the long term help to phase out the use of coal to make steel altogether.

The new research plant will be the biggest in the world to use so-called Proton Exchange Membrane (PEM) technology developed by Siemens, which the German company says smoothes out power supply fluctuations better than other technologies.

The companies said the 6 megawatt, 18 million euro ($19.2 million) plant will be more closely integrated into the steel-making process than similar green hydrogen projects. Experiments are likely to start in about two years, Voestalpine said.

The plant, mostly financed by the European Union, is being built on Voestalpine’s grounds in the Austrian city of Linz and will produce more power than other Siemens projects in Germany.

“It will be capable of very quickly varying its output to follow renewable energy sources production,” said Bart Biebuyck, executive director of the European Commission’s fuel cells and hydrogen joint undertaking.

“This green hydrogen will be used in the reduction of the iron ore in a concept that is very unique worldwide and which the global steel industry ... will closely monitor,” he said.

Voestalpine Chief Executive Wolfgang Eder said, however, that it would take at least 15 years to work out how green hydrogen could replace coal in the steel-making process without major cost increases.

Voestalpine mainly uses coal to reduce iron ore though in its plant in Texas it uses natural gas, cutting carbon emissions by about 40 percent, and green hydrogen would be the next step.

“On the path towards decarbonisation we must walk from coal via natural gas as an interim solution ... towards hydrogen in the long term,” Eder said.

The world’s biggest oil companies and carmakers have also pledged to invest more in hydrogen technologies. ($1 = 0.9377 euros) (Reporting by Shadia Nasralla; editing by David Clarke)